German kitchen manufacturers in the top spot
Compared against other European countries, Germany’s kitchen furniture industry leads the field – not only in terms of orders, but also as regards technology and design – as shown by “möbel kultur” magazine’s latest study.
The high export ratio of 40 per cent provides German companies with a degree of independence from their domestic market, which has been weakening of late. The order intake in 2018 shows German kitchen furniture manufacturers achieving sales growth of 6.7 per cent in international business and 7.28 per cent domestically.
Promoting the high quality of upholstered furniture
Average prices in the upholstered furniture sector have risen considerably, because almost two-thirds of German upholstered furniture is manufactured in eastern Europe, where wage costs have increased sharply. Another reason for this rise in prices is the trend for furniture that retains its value, such as items with a relaxation function.
The specialised trade focuses on price-based advertising, but would be better advised to concentrate on a strategy in which furniture is regarded as a cultural asset and in which large retailers in particular emphasise its high quality through appropriate campaigns. Sales performance in 2018 declined by 1.53 per cent domestically and by 2.18 per cent outside Germany.
Growth primarily in the export trade
In 2018, the home furnishings sector recorded a fall in sales of 1.2 per cent within Germany and 1.0 per cent abroad. Figures for the first four months of 2019 were much improved at 3.33 per cent in the domestic market and as much as 8.33 per cent abroad.
As noted for the kitchen furniture sector, the trend for the home and bedroom furnishings industry is more positive in terms of international sales. Growth is therefore largely being driven by the export trade, i.e. only those firms with a strong focus on exports are benefitting from the positive trend.
Age profile in furniture industry too top-heavy
The level of sickness absence between February and April 2019 revealed a slight increase of 1.3 per cent in comparison with the previous year. The lowest number of sick days were recorded in the kitchen and bathroom category, the highest in upholstered furniture.
The reason for this is the age distribution in both segments. Older employees have the highest level of sickness absence, and they are most strongly represented in the upholstered furniture industry. The sector should therefore take countermeasures by means of improved health management.
Recruit young talent at an early stage
In the manufacturing sector as a whole, 20.5 per cent of employees are aged between 18 and 30 – a figure that falls to just 15 per cent in the furniture industry. In terms of the 51-to-60 age bracket, the ratio is 27.7 per cent, compared with 34.2 per cent in the furniture industry.
There are signs of a severe shortage of junior staff and skilled workers when today’s generation of 41-to-50-year-olds takes retirement. The sector should prepare for this by making jobs more attractive to younger employees and by explicitly focusing on strong employee branding.
Number one export market: France
France remains by far the strongest export market for German furniture. However, performance in the individual segments varied considerably. There was a significant foreign trade surplus in kitchen furniture, with imports declining to a current level of below 3 per cent.
The upholstered furniture sector presents a rather different picture, being heavily focused on domestic sales – the export ratio lies below 20 per cent. France is far and away the most important export market and saw a rise in exports of 6.6 per cent in 2018. The impending exit of the UK from the European Union is already having an impact with a 5.3 per cent decline in exports.
Poland remains most important source of imports
Poland continues to occupy a dominant position in terms of imports: products brought in from Germany’s neighbouring country make up a good quarter of all of its imports.
In 2018, they increased by 2.2 per cent. China, the Czech Republic, Italy, and Hungary also have a place in the top five. Imports from these countries declined by 2.08 per cent in 2018.
Increased energy costs
Effective cost management is indispensable when it comes to the successful operation of medium-sized companies. Materials like wood and metals have reduced in price, but energy costs continue to rise. This poses a problem for the furniture industry, because the increasing use of technology and automation means more energy is required.
With energy costs already increasing, this trend has a double impact on the furniture industry. As a result, the requirement for sustainable energy production and manufacturing will continue to grow if businesses are to stay commercially viable.
The full study contains further interesting statistics and overviews providing more detailed information about the developments in the German furniture industry. It is available to purchase in the Ferdinand Holzmann Verlag online shop.